Conclusion, Investment Implications, Strategy

First Majestic Silver Corp.(AG) appears to be in the process of establishing a significant price bottom at its early February lows. A sustained rise above the $9.36 area would help confirm this and target an additional 29% rise to $12.69.

Analysis and Rationale

First Majestic Silver Corp.(AG) engages in the acquisition, exploration, development, and production of mineral properties with a focus on silver production in Mexico. It owns and operates six silver producing mines, including the San Dimas Silver/Gold Mine covering an area of 71,867 hectares located in Durango; the Santa Elena Silver/Gold Mine covering an area of 101,772 hectares located in Sonora; La Encantada Silver Mine covering an area of 4,076 hectares situated in Coahuila; San Martin Silver Mine covering an area of 38,512 hectares located in Jalisco, as well as 1,296 hectares of surface land; La Parrilla Silver Mine covering an area of 69,478 hectares located in Durango; and Del Toro Silver Mine covering an area of 2,159 hectares situated in Zacatecas in Mexico. The company was formerly known as First Majestic Resource Corp. and changed its name to First Majestic Silver Corp. in November 2006. First Majestic Silver Corp. was incorporated in 1979 and is headquartered in Vancouver, Canada.

Chart 1 below plots AG daily since May along with its 200-day moving average, the latter a widely-watched major trend proxy.  The chart shows that AG is testing, and appears to be stabilizing from, major underlying support at $9.46 to $9.36 which is its 200-day moving average and Feb 4th low.  A sustained rise above this support area would confirm this and target an additional 29% rise to $12.69 per share. 

Chart 1

Table 1 below shows that, considering the aforementioned upside target and a protective stop placed below the $9.36 area, a long entry price of $9.83 would provide a 1:6.1 risk/reward ratio (risking $1.00 to make $6.10) with an initial risk of 4.8%.

Table 1

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